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Gravel’s half right: Democrats cozy with Wall Street, but small donors are up, too

At a recent presidential debate, former Alaska Sen. Mike Gravel complained his Democrats no longer stood for the “ordinary working man.”

“The Clintons and the (Democratic Leadership Council) sold out the Democratic Party to Wall Street,” Gravel said. “Look at where all the money is being raised right now for Hillary (Clinton), (Barack) Obama and (John) Edwards. It’s the hedge funds, it’s Wall Street bankers.”

Was Gravel right? Yes and no. Increasingly, Democrats and Republicans have dipped into the same corporate donor pools, including Wall Street.

But other factors mitigate his criticism: the elimination of big, “soft” money donations and a very recent rise in the number of small donors.

Since the 1980s, campaign finance experts say, Democrats have extended their reach into Wall Street and corporate America, creating friction with labor, a traditional supporter, on issues such as trade agreements and balky attempts to raise the minimum wage.

Sheila Krumholz, executive director of the campaign watchdog Center for Responsive Politics, said Democrats still depend greatly upon labor “as a powerhouse both for campaign donations and feet on the ground.”

But as they have reached into corporate America and to Wall Street, Krumholz said it has become “difficult for the Democrats, because the major part of their platform is being for the little people and fighting for the disenfranchised.”

Not coincidentally, there has been what Colby College campaign finance expert Anthony Corrado Jr. calls a narrowing of legislative priorities between Democrats and Republicans.

Democrats have made fresh alliances with emerging industries, most notably California’s Silicon Valley. And in the race for a relatively new source of political cash – the hedge fund industry – Democratic presidential candidates are at rough parity with GOP counterparts.

According to the Center for Responsive Politics, Democrats got about 42 percent of the $1.2 billion in business-related donations in the 2000 election.

By 2004, the take rose to 45 percent of $1.5 billion. Meanwhile, Democrats held onto a vast majority of labor-related donations, getting 87 percent of the $61 million the center identified in 2004.

Democrats still get the vast majority of labor’s support. Devoid of big, “soft money donations,” both national parties have expanded their small-donor bases.

What some see as a small-donor revolution, first tapped by Howard Dean and now led by Obama, might dilute the overall impact of traditional big donors in this and coming elections.

Sen. Clinton, D-N.Y, has led a record-breaking dash for cash so far in 2007, taking in $63 million through June. Sen. Obama, D-Ill., got nearly $59 million. Ex-Massachusetts Gov. Mitt Romney took in $44 million to lead Republicans. Collectively, the top six raised more than $250 million through June, a level Sen. Joe Biden, D-Del., who took in $6.5 million, called “obscene.”

Whatever you call it, the “money primary” has dominated the early 2008 narrative, establishing Clinton as a front-runner, raising Obama as a serious contender and downsizing expectations for Sen. John McCain, R-Ariz., who has not met ambitious fundraising goals.

Corporate-related donations create “voter cynicism about who the political process really serves,” AFL-CIO President John Sweeney said. He added that, “while corporations continue to flood the process with big cash, the political parties show their true colors with their actions on the issues – things like increasing the minimum wage . . . and passing sound trade policy. Actions speak louder than campaign coffers.”

A Center for Responsive Politics analysis of each candidate’s sector sources of money shows Clinton, Obama, Romney, ex-New York Mayor Rudy Giuliani, and McCain, all draw most heavily from what the center aggregates as the “finance, insurance and real estate” sector. Only the trial lawyer Edwards cut against the grain, drawing more from lawyers and lobbyists than any other sector.

But from April through June, donors who gave $200 or less to presidential candidates accounted for more than a fourth of the money raised by candidates, nearly twice the rate for the first three months of the year. Krumholz said it was “refreshing to see so many donors participating in something that has long been the exclusive domain of an elite group of wealthy individuals and special interests.”

Obama had a record 258,000 donors. Romney led Republicans with around 80,000.

The Democratic Party’s shift to Wall Street and corporate America got its push from Democratic Rep. Tony Coelho, who headed the party’s congressional campaign committee in the early 1980s.

Bill Clinton extended the reach in the 1990s. Hillary Clinton and other Democrats continue the trend. She trails only Romney in donations from those associated with hedge funds, according to the center.

But Al From, director of the Democratic Leadership Council, said Bill Clinton’s presidential results contradict Gravel’s claims: “(Clinton) created 22 million new jobs, got incomes going up, reduced poverty faster than any decade but one in the history of the country, reduced crime, made our neighborhoods safer.”

On the Web:

www.opensecrets.org – Center for Responsive Politics, campaign finance watchdog group.

Chuck Raasch is political editor for Gannett News Service. E-mail: craasch@gns.gannett.com. Get more behind-the-scenes reports, context and analysis about politicians and the political process in Raasch’s Furthermore blog. Look for it at http://gns.gannettonline.com/apps/pbcs.dll/section?Category=BLOGS03.

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